This will be the year of the highly anticipated 5G wireless system rollout around the world and data suggest investors are preparing for that with the Defiance 5G Next Gen Connectivity ETF (NYSEArca: FIVG).
The Defiance Next Gen Connectivity ETF is the first ETF to emphasize securities whose products and services are predominantly tied to the development of 5G networking and communication technologies. FIVG does this by tracking the BlueStar 5G Communications Index, and FIVG attempts to invest all, or substantially all, of its assets in the component securities that make up the Index.
FIVG “surpassed $200M in less than 12 months of launch, making it one of the most successful thematic ETF launches in recent years,” according to a statement from New York-based Defiance ETFs.
5G technology will use a higher frequency band versus the current 4G technology standard, resulting in faster transmission of data. Being able to transmit copious amounts of data at a faster rate is certainly of benefit for wireless companies and their users, but 5G could be a major disruptor in various industries.
Give A High FIVG
FIVG offers investors liquid, transparent and low-cost access to companies engaged in the research & development or commercialization of systems and materials used in 5G communications. The underlying BlueStarGlobal 5G Communications Index tracks approximately 60 globally-listed stocks across all market capitalizations, with special weighting given to large caps (71%.) It uses a tiered weighting system that divides upholdings. The ETF has been around since March of 2019 and has an expense ratio of 0.30%.
The BlueStar 5G Communications Index is a rules-based index that tracks the performance of a group of US-listed stocks, of global companies that are involved in the development of or are otherwise instrumental in the rollout of 5G networks. These securities are part of the following categories: core carrier-grade networking equipment including cellular antennas and routers, mobile network operators, satellite-based communications, enhanced mobile broadband chips, new radio technology, wireless network test and optimization equipment, cloud computing equipment, software-defined networking or network functions virtualization, fiber optic cables, or cell tower and/or data center real estate investment trusts.
The possible applications of 5G technologies are only in the exploration stages, and the possibility of returns is uncertain and may not be realized soon. Nonetheless, it presents an opportunity that could see early adopters reap the benefits, especially if the technology is utilized to its fullest capabilities.
For more thematic investing ideas, visit our Thematic Investing Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
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